the partnership between the chinese government and hong

The Partnership between the ChineseGovernment and Hong Kong’s CapitalistClass: Implications for HKSARGovernance, 1997–2012Brian C.H. Fong*

AbstractExisting literature has long recognized that a partnership has been forgedbetween the PRC government and Hong Kong’s capitalist class. However,the implications of such a partnership for HKSAR governance have yet tobe thoroughly explored. By examining the formation of this partnershipand its consolidation after 1997, this article argues that the business sector’sdirect access to the sovereign state has fundamentally changed the dynamicsof state–business relations in the HKSAR. As a consequence of the partner-ship between Beijing and the business sector, business elites have taken theirconcerns straight to the mainland authorities whenever they see their inter-ests affected by the post-colonial state. This kind of circumvention hasbecome a part of post-1997 politics, undermining the relative autonomy ofthe post-colonial state and resulting in growing cleavages within the state–business alliance during the first 15 years of the HKSAR. Whether andhow such a partnership will evolve in the aftermath of the 2012 chief execu-tive election remains to be seen.

Keywords: Chinese government; state–business relations; governance; HongKong

Existing literature has long recognized that a close partnership has been forgedbetween the PRC government and Hong Kong’s capitalist class since the transi-tion period of the 1980s–90s.1 However, the implications of such a partnership forgovernance of the Hong Kong Special Administrative Region (HKSAR) have yetto be thoroughly explored. By examining the formation of this partnership and itsconsolidation after 1997, this article argues that the business sector’s direct accessto the sovereign state has fundamentally changed the dynamics of state–businessrelations in the HKSAR. Whenever business elites see their interests affected by

* Hong Kong Institute of Education. Email: [email protected] Goodstadt 2000 and So 1999.

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affairs in Hong Kong, they bypass the HKSAR government and go straight toBeijing where their concerns will receive a sympathetic hearing. This kind of cir-cumvention has become a part of post-1997 politics, undermining the relativeautonomy of the post-colonial state and resulting in growing cleavages withinthe state–business alliance during the first 15 years of the HKSAR era.This article is organized into four sections. It begins with a review of the origins

of the partnership between Beijing and the business sector in Hong Kong. It thengoes on to discuss the consolidation of this partnership since 1997 through insti-tutionalized communication channels, the Liaison Office’s united front work andmainland–Hong Kong economic integration. The third section examines howprivileged access to Beijing has equipped Hong Kong’s business elites withpower leverages vis-à-vis the post-colonial Hong Kong state and how this haseroded HKSAR autonomy. Finally, the article discusses prospects for the part-nership in the wake of the 2012 chief executive election.

The Politics of Transition and the Origins of the PartnershipThe partnership between Beijing and Hong Kong’s capitalists can be traced backto the Sino-British negotiations of 1982–84.2 According to the principles of “onecountry, two systems” and “Hong Kong people ruling Hong Kong,” the HKSARgovernment would be made up of local Hong Kong people. In other words, theChinese government would not have any official presence in the future HKSARgovernment and would have to groom reliable local agents to exercise governingpower after 1997.3 Thus, the key question for Beijing leaders at that time waswho could be entrusted to govern the HKSAR? Clearly, it was Beijing’s intentionthat Hong Kong’s capitalists would make up the majority of the future HKSARpolitical establishment and extend the colonial state–business governing coali-tion.4 According to Xu Jiatun 许家屯, director of Xinhua News Agency HongKong branch (Xinhua Hong Kong) from 1983 to 1989, Beijing was of theview that:

To implement the principle of “Hong Kong people ruling Hong Kong,” the future HKSARgovernment shall be mainly made up of the local capitalist class with the participation of theworking class. It shall be a cross-class alliance, but the capitalist class should form the coreof the whole alliance [author’s translation].5

Beijing’s definition of “Hong Kong people ruling Hong Kong” was about build-ing a governing coalition between the future HKSAR government and the busi-ness sector. The reason why Beijing chose to partner itself with local capitalists isrevealed through a closer examination of the politics of the transition period,which shows the convergence of the interests of Beijing and the business sector.

2 For an account of the Sino-British negotiations, see Tsang 1997, 81–110.3 Ma 2007, 34.4 From the founding of the colony, the colonial administration maintained a collaborative alliance with

the British and local Chinese capitalists. For details, see Rear 1971; Ngo 2000a.5 Xu 1993, 141–42.

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Beijing knew that it was essential to gain the support of the business sector inorder to maintain the stability of Hong Kong’s capitalist system.6 In the eyes ofthe PRC’s leaders, Hong Kong’s capitalism is not just a system of competitivemarkets, but is actually a political economy dominated by big capitalists.7 Thestrategic importance of the business sector to the stability of Hong Kong’s econ-omy and society was demonstrated by the economic turbulence caused by theoutflows of capital, led by major British hongs such as the Jardine Group andHSBC,8 during the transition period. Beijing believed that the future stabilityof Hong Kong was dependent upon maintaining the confidence of investorsand that it was critical to co-opt local Chinese capitalists to fill the vacuum leftby the exodus of British capital.9 When Xu Jiatun was appointed as head ofXinhua Hong Kong in 1983, he quickly found that his chief tasks would be,“delaying the outflow of British capital, stabilizing the local Chinese capital,solidifying Taiwan capital, attracting foreign capital and strengthening mainlandcapital.”10

Second, Beijing viewed securing the support of business elites as strategicallyimportant to China’s own economic reforms. Hong Kong’s global business net-works and its status as an international financial centre were invaluable assets forChina in its efforts towards building a market economy.11 More importantly,Hong Kong’s business people were the major investors in China, providingalmost two-thirds of foreign domestic investment during the 1980s and 1990s.As such, securing the support of local capitalists in the resumption of Chinesesovereignty over Hong Kong was not only an important way to maintain stabilityin Hong Kong, it was also of paramount importance to Beijing’s own economicmodernization.12

Third, Beijing saw the business sector as a valuable ally in fending off chal-lenges by Hong Kong’s democrats. The PRC government was afraid that thedemocratization process started in the 1980s would gradually lead to the riseof a highly autonomous, if not independent, government in Hong Kong thatwould be beyond its control.13 The active participation of democrats in the1989 Tiananmen movement further alarmed the mainland authorities, whowere concerned that rapid democratization in Hong Kong would not be condu-cive to their own regime interests. Beijing wished to consign the implementationof universal suffrage in Hong Kong to a distant future date, and saw the politic-ally conservative business sector as a reliable partner in the fight against demo-crat challenges.14

6 King 1991.7 Goodstadt 2000.8 For an account of the exodus of British capital, see Feng 1996, 289–311 and 312–339.9 Yep 2009.10 Xu 1993.11 Yep 2007.12 Goodstadt 2000.13 So 1999.14 Yep 2009.

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It is also important to look at why Hong Kong’s capitalist class, and in particu-lar the local Chinese business community, made the collective decision to aban-don their previous partnership with the colonial Hong Kong state and turn to thenew governing coalition engineered by Beijing. In short, the shift was actually acalculated collective response made in a time of “contentious politics”15 as ameans of overcoming the common challenges presented at that time. In this con-nection, the most important challenge faced by the business elites was the recon-stitution of Hong Kong’s political order in the transition period. In the colonialera, the collaborative alliance between the colonial state and the business sectorhad allowed local capitalists to enjoy the privileges of a pro-business policy envir-onment, including low taxation, minimum welfare provision and few governmentregulations. However, the impending change in sovereignty implied that the colo-nial political order was going to be reconfigured. This gave Hong Kong’s businessleaders a strong sense of insecurity, and led them to explore new approaches tomaintaining their privileged position in post-handover Hong Kong.16

The rise of the democrats during the transition period also fuelled the businesssector’s sense of uncertainty. For the local capitalists, the democrats’ demand forconstitutional reform was an unprecedented challenge to their class interests.Business elites were afraid that their privileged position in Hong Kong wouldbe undermined as a result of democratization, and electoral politics wouldbring about stronger trade unions, higher taxes and more government regula-tions.17 In fact, the business sector’s worries were not without grounds. Fromthe 1980s onwards, the democrats had begun to win landslide election victoriesby promoting a pro-welfare and pro-grassroots agenda. The business communitythought that it could rely on Beijing to resist this trend towards democratization.18

During this time of contentious politics, the business elites, and in particularthe local Chinese capitalists, believed it was necessary to protect their vestedinterests by seeking political patronage from the incoming sovereign state.19

Clearly, the business community’s interests coincided with those of Beijing,and enabled the smooth formation of a partnership. On the one hand, this alli-ance allowed Beijing to secure a reliable coalition partner with whom it couldcontain the waves of democratization and safeguard Hong Kong’s capitalist sys-tem, while on the other hand it provided the business sector with a platform toextend its influence over the territory.20

15 Comparative studies on state building indicate that political elites are more inclined to take collectiveaction to pursue broader class interests when they are facing common political challenges in times of“contentious politics.” For details, see Slater 2010.

16 Ngo 2000a.17 So 1999.18 Loh 2010, 163.19 For example, Xu Jiatun mentioned in his memoirs that local capitalists like Pao Yue-kong, Li Ka-shing,

Kwok Tak-Seng, Run Run Shaw, Fok Ying-tung and Cha Chi-min had maintained close ties with himthroughout the 1980s and they frequently sought Xu’s opinion about China’s policy towards HongKong. See Xu 1993, 129.

20 Goodstadt 2009, preface ix.




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The formation of this partnership was evident by Beijing’s co-option of businesselites into its united front during the transition period.21 Business tycoons wereappointed to the various bodies responsible for administering the transition of sov-ereignty, including the Basic Law Drafting Committee, the Basic Law ConsultativeCommittee, the Hong Kong Affairs Advisers, the Preliminary Working Committeeand the HKSAR Preparatory Committee. Business leaders were also co-opted byBeijing as representatives of Hong Kong’s compatriots to the National People’sCongress (NPC) and the National Committee of the Chinese People’s PoliticalConsultative Conference (CPPCC). Indeed, the transition period saw the replace-ment of the old political alliance between the colonial state and Hong Kong’s cap-italist class with a new “China-centered state–business alliance.”22

The Consolidation of the Partnership Post-1997: the Business Sector’sDirect Access to the Sovereign StateSince the handover, Hong Kong’s capitalists have consolidated their privilegedaccess to the new sovereign state by virtue of their over-representation amongthe Hong Kong delegations to the NPC and CPPCC, their close relationshipwith the Liaison Office and their intricate business networks with the mainlandauthorities.

The business sector’s institutionalized access to the sovereign state

Since the 1980s, Beijing has used the NPC and CPPCC as the principal platformsfor incorporating Hong Kong’s capitalists and business elites. This trend contin-ued after 1997.23 Empirical research on the occupational backgrounds of all HongKong NPC and CPPCC delegates after 1997 shows that the business sector wasconsistently the dominant player within Beijing’s united front (Table 1 and 2).Within the NPC delegations, business people occupied an average of 43.7 percent of the total number of seats, while representatives of the business sector with-in the CPPCC delegations held 70.8 per cent of seats. Hong Kong’s delegationsincluded tycoons like Chan Yau-hing 陳有慶 and Tsang Hin-chi 曾憲梓

(NPC), and Li Tzar-kuoi 李澤鉅, Cheng Kar-shun 鄭家純, Kwok Ping-sheung郭炳湘, Lo Hong-sui 羅康瑞, Fung Kwok-king 馮國經 and Wu Ying-sheung胡應湘 (CPPCC), covering almost all the big business families in Hong Kong.The business sector’s dominance over the Hong Kong NPC and CPPCC dele-

gations not only gives local capitalists political prestige, but it also provides themwith an unprecedented institutionalized channel through which to gain direct

21 For empirical studies on the Chinese government’s political co-option in the transition period, seeCheung and Wong 2004.

22 So 1999.23 Since 1997, Hong Kong deputies to the NPC have been elected locally through an election conference,

while the Hong Kong members to the CPPCC are “invited” by Beijing authorities. In practice, the localNPC and CPPCC delegates are handpicked by Beijing through the Liaison Office.




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access to Beijing’s top leaders. In the first quarter of every year, the annual fullsessions of the NPC and the CPPCC meet in Beijing, after which all HongKong delegates continue to stay there for around two weeks to deliberate onnational-level affairs in sessions known as lianghui 两会. The lianghui provides

Table 1: Background Analysis of Hong Kong Deputies in the NPC (1998–2012)

Occupationalbackground

9th NPC(1998–2002)

10th NPC(2003–2007)

11th NPC(2008–2012)

Total

No. % No. % No. % No. %Politician 1 3 1 2.9 0 0 2 1.9Business 14 42.4 15 42.9 16 45.7 45 43.7Professional 3 9.1 3 8.6 8 22.9 14 13.6Social services 10 30.3 10 28.6 8 22.9 28 27.2Labour 2 6.1 3 8.6 1 2.9 6 5.8Culture & media 1 3 1 2.9 0 0 2 1.9Others 2 6.1 2 5.7 2 5.7 6 5.8Total* 33 100 35 100 35 100 103 100

Source:Author’s own research based on the information available on the official website of the NPC and CPPCC sessions, http://

2011lianghui.people.com.cn.Notes:

“Politician” refers to full-time legislative councillors and district councillors; “Business” refers to chairmen, directors, executives andmanagers from commercial corporations; “Professional” refers to professionals from legal, accounting, architecture, surveying, planning,engineering, medical and health sectors; “Social services” refers to practitioners from education, community and social services, andreligious sectors; “Labour” refers to trade unionists; “Culture & media” refers to practitioners from the arts, culture, media and publish-ing sectors. *In each NPC delegation, there are a few “Chinese members” who are mainland officials stationed in the HKSAR, includingofficials from the Central Liaison Office, Chinese People’s Liberation Army and the Office of the Commissioner of the Ministry of ForeignAffairs. These Chinese members have been excluded in the above table.

Table 2: Background Analysis of Hong Kong Members of the National Committeeof the CPPCC (1998–2012)


9th CPPCC(1998–2002)

10th CPPCC(2003–2007)

11th CPPCC(2008–2012)

Total

No. % No. % No. % No. %Politician 1 0.9 1 0.8 1 0.8 3 0.8Business 79 69.9 80 67.8 91 74.6 250 70.8Profession 7 6.2 11 9.3 7 5.7 25 7.1Social services 11 9.7 12 10.2 8 6.6 31 8.8Labour 3 2.7 2 1.7 2 1.6 7 2Culture & media 10 8.8 7 5.9 5 4.1 22 6.2Others 2 1.8 5 4.2 8 6.6 15 4.2Total* 113 100 118 100 122 100 353 100

Source:Author’s own research based on the information available on the official website of the NPC and CPPCC sessions, http://

2011lianghui.people.com.cn.Notes:

See notes for Table 1. *In each CPPCC delegation, there are a few “Chinese members” who are mainland officials stationed in theHKSAR, including officials from the Central Liaison Office, Chinese People’s Liberation Army and the Office of the Commissioner of theMinistry of Foreign Affairs. These Chinese members have been excluded in the above table.



http://2011lianghui.people.com.cn







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a regular and direct communication channel through which Hong Kong’s busi-ness elites can air their views on Hong Kong’s affairs to Beijing officials. TheNPC and CPPCC delegations also meet top state leaders at this time.24

Political co-optation of the business elites through the united front workof the Liaison Office

The consolidation of the partnership between Beijing and the Hong Kong’s cap-italist class after 1997 is also evident in the united front work conducted by thelocal agent of the sovereign state – the Liaison Office. During the colonial era,the British government in London did not attempt to govern Hong Kongdirectly.25 However, the Chinese government has put in place the machinery tomanage local affairs in the HKSAR. Under the hierarchical structure of theChinese Communist Party (CCP), the Central Leading Group on Hong Kong–Macau Affairs is the top-level task force responsible for overseeing HongKong affairs. Currently headed by Politburo Standing Committee member,Zhang Dejiang 张得江, the Central Leading Group is comprised of officialsfrom relevant departments like the Ministry of Foreign Affairs and UnitedFront Work Department.26 It is supported by four major units, namely theHong Kong and Macau Affairs Office, the Liaison Office, the Office of theCommissioner of the Ministry of Foreign Affairs, and the People’s LiberationArmy Hong Kong Garrison.27

In this regard, the role of the Liaison Office is of particular importance. TheLiaison Office, known as Xinhua Hong Kong before January 2000, is the officialrepresentative organization of the Chinese government in the territory and it isalso where the CCP’s Hong Kong and Macau Work Committee (HKMWC) islocated. As the local agent of the sovereign state since 1997, the Liaison Officeoversees an extensive network of “leftist organizations” such as commercial orga-nizations (e.g. banks, department stores and tourist agencies), educational andcultural organizations (e.g. schools, newspapers and bookstores) and mass orga-nizations (e.g. labour unions, district organizations and organizations for the eld-erly, youth and women).28

The principal function of the HKMWC is to conduct united front work inHong Kong. In the construction of the united front, the business sector is alwaysthe principal target of co-option. Since the 1980s when it was the Xinhua HongKong headed by Xu Jiatun, the HKMWC has had a political co-option

24 For example, during the 2011 lianghui, arrangements were made for the Hong Kong delegations to haveprivate meetings with the then vice-president, Xi Jinping, and director of the Hong Kong and MacauAffairs Office, Wang Guangya.

25 Miners 1987, 38.26 Yep 2010.27 Loh 2010, 201–06.28 Ibid., 30.




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mechanism that focuses on drawing the business sector over to the side of Beijing,and this political strategy continues to direct its united front work today.29

The membership lists of the “Presidium of the preparatory committee of HongKong compatriots in celebration of the founding anniversary of the People’sRepublic of China” (guoqing chouweihui国庆筹委会) demonstrate how extensivelyunited front work is linked to the business sector. These preparatory committeesare organized annually by the Liaison Office to coordinate national day celebrationactivities. Empirical research into the occupational backgrounds of the membersshows that the business sector consistently made up the single largest group inthe Liaison Office’s united front, taking up, on average, 58.1 per cent of seatsfrom 1998 to 2011 (Table 3). A closer examination of the membership lists revealsthat big capitalists are regular members. Taking the 2011 Preparatory Committeeas an example, members included big capitalists like Li Ka-shing 李嘉誠,Kwok Ping-sheung 郭炳湘, Lee Shau-kee 李兆基 and Cheng Yu-tung 鄭裕彤.Leaders of major business associations were also co-opted as regular members,including Wu Ting-yuk 胡定旭 (chairman of the Hong Kong General Chamberof Commerce), Choi Koon-shum 蔡冠深 (chairman of the Chinese GeneralChamber of Commerce), Wong Yau-ka 黃友嘉 (president of the ChineseManufacturers’ Association of Hong Kong) and Zhong Zhi-ping 鍾志平 (chair-man of the Federation of Hong Kong Industries). While it is difficult to tracethe behind-the-scenes united front work done by the Liaison Office, this findingprovides insightful evidence about the close relationship between the business sec-tor and the local agent of the sovereign state after 1997.

The business sector’s increased economic links with the mainland authorities:mainland–Hong Kong economic integration and its political implications

The partnership between Beijing and Hong Kong’s capitalists after 1997 is alsothe result of macro-economic changes across the boundaries. In the 1980s whenBeijing initiated economic reforms, Hong Kong manufacturers relocated theirfactories to the mainland and Hong Kong’s economy began to integrate withChina.30 This process of economic integration accelerated in the 1990s owingto increased cross-border investments: Hong Kong investments in the mainlanddiversified from labour-intensive manufacturing industries into other sectorslike real estate and infrastructure, while Chinese firms increased their invest-ments in various sectors of Hong Kong’s economy. The signing of the CloserEconomic Partnership Agreement (CEPA) in 2003 further stimulated main-land–Hong Kong economic integration.31 The CEPA provided Hong Kong’sbusinesses with greater access to China’s market and also allowed mainland

29 Ibid., 183.30 Huang 1997.31 Wang and Liang 2004.




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Table 3: Background Analysis of Members of the Presidium of the Preparatory Committee of Hong Kong Compatriots in Celebration ofthe Founding Anniversary of the People’s Republic of China (1998–2011)

Occupation 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Total

No. % No. % No. % No. % No. % No. % No. % No. % No. % No. % No. % No. % No. % No. % No. %

Government 13 9.9 12 8.2 15 10.1 16 10.7 15 10 15 9.9 15 9.9 17 11.3 16 10.1 13 8.6 10 6.5 11 7.1 10 6.3 13 8.3 191 9Politician 3 2.3 3 2 3 2 3 2 3 2 3 2 3 2 3 2 3 1.9 3 2.0 3 1.9 3 1.9 2 1.3 3 1.9 41 1.9Business 79 60.3 87 59.2 82 55.4 85 56.7 84 56 89 58.9 90 59.6 90 59.6 92 58.2 90 59.6 90 58.1 91 58.3 93 58.1 86 55.1 1,228 58.1Professional 5 3.8 6 4.1 7 4.7 8 5.3 8 5.3 8 5.3 8 5.3 8 5.3 9 5.7 7 4.6 6 3.9 6 3.8 7 4.4 8 5.1 101 4.8Social services 15 11.5 16 10.9 16 10.8 17 11.3 16 10.7 14 9.3 15 9.9 15 9.9 20 12.7 21 13.9 24 15.5 25 16 26 16.3 25 16 265 12.5Labour 4 3.1 5 3.4 6 4.1 5 3.3 6 4 6 4 6 4 6 4 6 3.8 5 3.3 5 3.2 5 3.2 5 3.1 5 3.2 75 3.5Culture & media 10 7.6 16 10.9 16 10.8 15 10 16 10.7 13 8.6 13 8.6 11 7.3 11 7 11 7.3 11 7.1 11 7.1 11 6.9 14 9 179 8.5Others 2 1.5 2 1.4 3 2 1 0.7 2 1.3 3 2 1 0.7 1 0.7 1 0.6 1 0.7 6 3.9 4 2.6 6 3.8 2 1.3 35 1.7Total* 131 100 147 100 148 100 150 100 150 100 151 100 151 100 151 100 158 100 151 100 155 100 156 100 160 100 156 100 2,115 100

Source:Author’s own research based on the membership lists of the Presidium of Preparatory Committee for National Day Celebrations, available in Ta Kung Po and Wen Wei Po.

Notes:“Government” refers to political officials or civil servants of the HKSAR government; see notes for Table 1 for definitions of other categories. *There were a few “Chinese members” (i.e. mainland officials from central

government offices in the HKSAR including the Liaison Office, Chinese People’s Liberation Army in Hong Kong and the Office of the Commissioner of the Ministry of Foreign Affairs in Hong Kong) in each preparatory committee.These Chinese members have been excluded in the above table.

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Chinese firms to make better use of Hong Kong’s financial and businessservices.32 The breadth and depth of mainland–Hong Kong economic integra-tion are illustrated in Figures 1 to 4. As seen in Figures 1 and 2, Hong Kong’strade with the mainland accounts for nearly half of the territory’s tradevolumes, and the mainland has become the biggest investor in the territory.Figure 3 indicates that the mainland is the principal investment destinationfor Hong Kong firms33 and Figure 4 illustrates that major Hong Kong con-glomerates have substantially increased their investments in the mainlandover the past decade.Mainland–Hong Kong economic integration has given Hong Kong’s business

elites increased privileged access to the mainland authorities. While the economicreforms implemented by the Chinese government over the past few decades havedeveloped a robust private sector, the CCP has retained its control over manystrategic economic sectors such as telecommunications and finance throughstate-owned enterprises, and various levels of governments have also set uptheir own companies.34 Provincial and municipal governments also have thepower to approve investment projects initiated by “foreign capital,” includingcapital from Hong Kong.35 Therefore, when Hong Kong’s conglomerates expand

Figure 1: Hong Kong’s Total Trade with Mainland China

Source:Adapted from the statistical tables available at the Census and Statistics Department’s website at http://www.censtatd.gov.hk.

32 Qu 2007.33 Excluding the British Virgin Islands, which are home to many of Hong Kong’s offshore companies.34 Dillion 2009, 43.35 Ngo 2000b.




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their investments in China, they often work closely with the central and provin-cial governments and their subsidiary companies, or actively pursue patronagefrom senior CCP leaders in order to overcome the various bureaucratic hurdles

Figure 3: Hong Kong’s Outward Direct Investment by Major Recipient Country atMarket Value (1998–2011)


Figure 2: Hong Kong’s Inward Direct Investment by Major Recipient Country atMarket Value (1998–2011)





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when seeking approval for investment projects.36 At the same time, those subsid-iaries owned by central and local governments will also cooperate with HongKong’s capitalists when they set up their businesses in the HKSAR, and provin-cial and municipal officials are also eager to attract investment from HongKong.37 Thus, cross-border economic activities have allowed Hong Kong’s capi-talists to develop intricate business networks and close personal ties with main-land officials.38

Figure 4: Percentage of Assets Held by Hong Kong Conglomerates in theMainland

Note:According to the “Hong Kong Financial Reporting Standard 8 – Operating Segments,” listed companies are required to disclose

and report segment information about the different types of products and services they produce and the different geographical areas inwhich they operate. Such a standard arises from the International Accounting Standards Board’s consideration of the FinancialAccounting Standards Board in the United States Statement No. 131 Disclosures about Segments of an Enterprise and RelatedInformation issued in 1997 (Hong Kong Institute of Certified Public Accountants, 2009). Most of the major conglomerates in HongKong started reporting such geographical information in 2000, but on certain occasions some companies will choose not to disclosetheir geographical information if the total amount of their assets, revenues and profits outside Hong Kong are not material or signifi-cant. The author collected the geographical information of the chosen major conglomerates in Hong Kong when such information anddata were available in their annual financial reports.Source:

Author’s own research based on the annual financial reports of the chosen companies.

36 For example, Li Ka-shing had fostered complex business connections with Deng Xiaoping’s family byhelping the Shougang Group to become one of the largest “red chip companies” on Hong Kong’s stockmarket in the 1990s. In return, Li Ka-shing’s guanxi with the Deng family helped him to expand hisbusiness empire in the mainland and also realize the controversial Oriental Plaza project in the primeareas of Beijing. See Ngo 2000b.

37 It is common for local Party officials to lead business delegations (zhao shang tuan) to Hong Kong inorder to attract investment from Hong Kong’s capitalists. For example, Xi Jinping, who served asParty secretary of Zhejiang province from 2002 to 2007, led a large-scale business delegation toHong Kong in 2005 and held private meetings with local tycoons and leaders of major business associa-tions. See “Xi Jinping shuai Zhe shang dao Gang mi shang ji” (Xi Jinping leads Zhejiang business dele-gation to Hong Kong), Wen Wei Po, 17 January 2005, A01.

38 For example, Zhang Gaoli, who was promoted to the Politburo Standing Committee at the 18th PartyCongress in 2012, maintained close ties with Li Ka-shing throughout his career. Zhang developed hisfriendship with Li during his tenure as Party secretary of Shenzhen, and Li even visited Shenzhen tobid farewell to Zhang personally before he moved to Shandong in 2002. When Zhang led a businessdelegation to Hong Kong in 2002 in his capacity as governor of Shandong province, he was warmly




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The Different Roles of Sovereign States in Governing Coalition-BuildingPre- and Post-1997The Chinese government did not initiate the practice of governing Hong Kongthrough a state–business partnership, but rather inherited the situation from thecolonial Hong Kong state. Prior to the handover, business elites had been exten-sively co-opted by the colonial state onto various advisory bodies. In thepost-1997 era, the business sector continues to be the major coalition partnerof the Hong Kong government and forms the single largest group on majoradvisory committees.39 On the surface, it appears that Hong Kong was, and con-tinues to be, governed by a similar political alliance between the government andthe business sector both before and after 1997. However, the different roles of thesovereign states imply that the internal dynamics of the governing coalitions arefundamentally different. Before 1997, London largely took a back seat and thecolonial state, headed by the governor, was the ultimate power holder withinthe state–business alliance; after 1997, although the post-colonial state headedby the chief executive has continued to absorb business elites into its advisorymachinery as in the colonial past, the new sovereign state – Beijing – has steppedin by co-opting the business sector on its own through the appointment of NPCand CPPCC delegates and the united front work of the Liaison Office.

Relations between London and Hong Kong’s capitalist class before 1997

Comparatively speaking, prior to the handover, the sovereign state (London)kept a distance from Hong Kong’s business sector, largely owing to several rea-sons. First, the two parties did not share common political or economic agendas,leaving little room for business elites to exert their influence by appealing toLondon for support. It was established practice by the British government to pre-vent the business sector from controlling the political agenda in the colony.Although the Hong Kong colony was established in order to facilitate Britishtrade activities in the Far East, London could not afford to run the colony forthe exclusive benefit of business interests at the expense of the local Chinesepopulation. Thus, whenever the British capitalists sought to expand their influ-ence by lobbying support in London, the British government usually chose notto entertain their requests and would join hands with the governor in resisting

footnote continued

welcomed by Li Ka-shing who openly pledged to increase his investments in Shandong. When Zhangbecame Party secretary of Tianjin in 2007, Li’s companies also expanded their investments there. See“Zhang Gaoli zai Shen wu Li Ka-shing” (Zhang Gaoli meets Li Ka-shing in Shenzhen), Ta KungPo, 13 December 2001, A04; “Chao Yan Lie ri qin Ying Zhang sheng zhang” (Li Ka-shing greetsZhang Gaoli under the burning sun), Wen Wei Po, 9 May 2002, B01; “Zhang Gaoli chang JinGanghezuo” (Zhang Gaoli advocates cooperation between Yianjin and Hong Kong), Hong KongEconomic Times, 19 September 2008, A38.

39 Cheung and Wong 2004.




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these pressures.40 Economically, while Hong Kong was Britain’s business centrein the Far East in the 19th century, the economic links between the business sec-tor and London became less important after the Second World War. Followingthe dissolution of the British empire in the 1950s, the United Kingdom developedcloser economic ties to the European Economic Community and the economiclinkages between Hong Kong and London steadily weakened.41

Second, Hong Kong’s capitalists never had institutionalized access to theBritish government. They were discouraged from appealing to the ColonialOffice, and, indeed, the governor remained the only official channel of commu-nication between Hong Kong and London.42 While there were certain occasionswhen the business sector had taken their complaints straight to the ColonialOffice in London, these incidents were exceptional cases.43

Finally, London did not establish any local governing mechanisms in HongKong and relied on the governor to manage the day-to-day affairs in the terri-tory. One notable feature of British policy on managing its colonial empirewas the devolution of power to the local governors in administering the colonies,meaning that London took no great interest in the day-to-day affairs of a colonyunless there was a major crisis.44 Thus, for most of the time, the colonial HongKong state maintained a great deal of political autonomy when managing theterritory.45

To sum up, the lack of a common political and economic agenda, the absenceof institutionalized communication channels, and the fact that there was nostrong British government presence in Hong Kong, meant that the relationshipbetween the business sector and the sovereign state remained distant during thecolonial era, making it difficult for the business sector to exert its political influ-ence by means of circumvention activities.46 This helped to sustain the relativeautonomy of the colonial state in administering Hong Kong and upheld theauthority of the governor as the ultimate holder of power in the territory.

Relations between Hong Kong’s capitalist class and Beijing after 1997

The dynamics of state–business relations have changed fundamentally since 1997owing to the fact that the business sector has now gained direct access to the sov-ereign state. Unlike London, Beijing has a direct stake in the governance of theHKSAR and increasingly adopts a more interventionist governing style.47 Beijing

40 Goodstadt 2009, 33.41 Ibid., 53, 231.42 Miners 1987, 38, 48.43 Scott 1989, 249.44 Lau 1994.45 Miners 1998, 214.46 Yep 2009.47 Despite the one country, two systems framework enshrined in the Basic Law, Beijing considers it neces-

sary, on top of the HKSAR government headed by the chief executive, to maintain its own politicalmachinery in the territory so as to enforce the “one country” principle. The strategic considerationsof Beijing were stated explicitly by the Liaison Office’s head of research, Cao Erbao, in his controversial




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has actively been engaged in creating a state–business alliance and has seen thebusiness sector as its principal target of co-option. The rules of engagementdesigned by Beijing to continue the state–business alliance after 1997 allow thebusiness sector to establish direct access to the sovereign state and have signifi-cantly changed the rules of political behaviour in the HKSAR era.The business sector’s direct access to Beijing has meant that the nature and

functioning of the state–business alliance is essentially different before andafter 1997. In the colonial era, the business sector’s restricted access to thesovereign state meant that governing coalition-building was basically a two-player game between the colonial Hong Kong state and the business sector,with the governor as the final arbitrator within the state–business alliance. Itwas difficult for business elites to challenge the governor’s authority by makingclaims to London, thus enabling the colonial state to maintain a higher degreeof autonomy vis-à-vis the business sector. However, after 1997, owing to theclose partnership between business elites and the sovereign state, governingcoalition-building has become a three-player game between the sovereign state,the post-colonial Hong Kong state and the business sector. Beijing’s leaders,rather than the chief executive, have become the real power centre of the state–business alliance.This important change in the nature of the state–business alliance has seriously

eroded the autonomy of the post-colonial state and has brought about far-reaching implications for HKSAR governance. As some neo-Marxists havepointed out, under a capitalist system the state must serve the interests of thebourgeoisie by facilitating capital accumulation on the one hand, but must alsomaintain a certain degree of autonomy from the capitalist class on the other.The significance of relative autonomy lies in its strategic importance in enablingthe state to pursue a policy agenda broader than the interests of any particularinterest group and achieve an appropriate balancing of different interests insociety.48 In the colonial era, despite its political alliance with the big capitalists,the colonial state was able to maintain a considerable degree of relative auton-omy vis-à-vis the business sector. The colonial state was quite effective in per-forming its role as an arbitrator of class interests and was able to mitigatesocial contradictions by pursuing policy reforms that were not welcome by thebusiness elites.49 However, post-1997 developments have shown that the post-colonial state’s impartiality has become increasingly untenable.

footnote continued

article in 2008. In this article, Cao provided an account of the operations of the mainland agencies inHong Kong and argued that these agencies, and in particular the Central Liaison Office, should operateas the “second governing team” in parallel to the HKSAR government (the first governing team). SeeCao 2008.

48 See Miliband 1969; Poulantzas 1978.49 Scott 1989, 58–59.




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Since 1997, the business sector’s increased access to the sovereign state has pro-vided the local capitalists with unprecedented channels through which to wieldinfluence over the post-colonial state. With Beijing, rather than the chief execu-tive, as the de facto power centre of the state–business alliance since the hand-over, local capitalists can take their concerns directly to Beijing or the LiaisonOffice and thereby exert pressure on the HKSAR government if they see theirinterests affected by government policies.50 From this perspective, the partnershipbetween Beijing and Hong Kong’s capitalists has effectively changed the balanceof power between the post-colonial state and the business sector: now local capi-talists are able to use their privileged access to the sovereign state to challenge thegoverning authority of the chief executive and to bargain for policy concessions.The direct political consequence of these circumvention activities is that the post-colonial state is encountering growing pressures from the business sector andfacing a serious erosion of its role as the arbitrator of class interests.The growing tendency of the business sector to influence local politics by dir-

ectly lobbying mainland officials is reflected by the large number of business dele-gations organized to visit Beijing. Table 4 summarizes the number of Hong Kongdelegations to Beijing from 1998 to 2011. The business sector has organized near-ly 40 per cent of the total number of delegations. Table 5 illustrates that duringtheir visits to Beijing, Hong Kong’s capitalists were received by senior Beijingofficials, including state leaders, NPC and CPPCC officials and other senior min-isters. While it has not been possible to trace the behind-the-scene discussionsbetween the business elites and Beijing officials and those visits that were notpublicly organized, the statistics indicate that Hong Kong’s business people areeager to engage with and lobby the Beijing authorities directly.Table 6 provides more concrete examples to illustrate how the governing

authority and autonomy of the post-colonial state are being eroded by the cir-cumvention activities of the business sector, including cases like housing targets,the single development approach for West Kowloon Cultural DevelopmentProject and the extension of the “black out period” for listed company directors.This table is definitely far from being exhaustive as it only includes those high-profile circumvention activities reported by the media. However, it provides auseful snapshot of how Hong Kong’s capitalists establish unprecedented powerleverage vis-à-vis the post-colonial state through their political and economicaccess to the mainland authorities. As the business sector’s circumvention activ-ities become a normal part of post-1997 political life, the post-colonial statestruggles to maintain its effective governance and uphold its authority as theultimate power holder in the territory.

50 Interview with a senior pro-business politician, July 2011.




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Table 4: Hong Kong Delegations to Beijing (1998–2011)

Delegations by background 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 TotalBusiness organizations 9 4 10 9 4 9 6 6 5 5 4 9 3 13 96Charities bodies 3 2 4 2 3 4 3 6 3 1 2 3 2 2 40Professional bodies 2 2 2 7 2 2 1 2 1 0 0 2 3 3 29Townsmen associations 0 1 0 2 2 0 4 4 1 0 0 1 2 3 20Political parties/political groups 0 0 2 0 0 4 2 0 3 2 3 0 0 2 18District bodies 0 1 2 1 0 2 1 1 0 0 1 0 2 1 12Women’s associations 1 0 0 1 2 2 0 0 0 1 0 2 0 0 9Cultural bodies 3 0 0 1 0 2 0 0 1 0 0 0 0 0 7Youth associations 2 0 0 0 0 0 0 0 0 0 0 0 0 5 7Religious bodies 2 1 0 0 0 0 0 0 0 1 0 0 0 0 4Others 0 3 3 1 0 2 1 0 0 0 0 0 0 3 13Total 22 14 23 24 13 27 18 19 14 10 10 17 12 32 255

Source:Author’s own research based on the content analysis of reports in four Hong Kong newspapers: Ming Pao, Hong Kong Economic Journal, Ta Kung Po and Wen Wei Po. The content analysis was conducted using the

keywords “Fang Jing Tuan” through the WiseNews electronic platform.

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Prospects for the Partnership in the Aftermath of the 2012Chief Executive ElectionThe partnership between Beijing and Hong Kong’s capitalists has been a signifi-cant factor shaping the first 15 years of HKSAR governance and has resulted ingrowing cleavages within the post-handover state–business alliance. However, therealpolitik concerning the 2012 chief executive election has raised new questionsabout the future of such a partnership.The 2012 chief executive election was the most controversial leadership contest

in the history of Hong Kong. It was a three-way race with the two pro-establish-ment candidates, Henry Tang Ying-yen 唐英年 and Leung Chun-ying 梁振英,standing against each other, and Albert Ho Chun-yan 何俊仁 from the pro-democracy camp.51 The result of the election, held on 25 March 2012, was a “div-isive poll”: the 1,200-member chief executive election committee gave LeungChun-ying 689 votes, Tang Ying-yen 285 votes, Ho Chun-yan 76 votes, and 82papers were declared invalid.52

Leung Chun-ying’s electoral victory was a surprise to many people. At thebeginning of the electoral contest, Tang was widely considered as the forerunnerfor the post, having been groomed by the Chinese government for decades.53

Tang was also seen as the candidate favoured by the major business tycoons54

and commanded much stronger business support than Leung (see Table 7 for thebackground analysis of candidates). Thus, when Beijing took the unprecedented

Table 5: State Officials Visited by Business Delegations (1997–2011)

No.* %State leaders

(president, vice-president, premier and vice-premier)30 10.7

Officials from NPC 1 0.4Officials from National Committee of CPPCC 15 5.4Officials from Hong Kong and Macau Affairs Office of the State Council 44 15.7Officials of other State Council ministries and commissions 146 52.1United Front Work Department 43 15.4Others 1 0.4Total 280 100

Note:*refers to the number of Hong Kong delegations received by state officials. As a delegation may be received by more than one state

official, the total number here is not the same as the total of number of business delegations in Table 8.

51 “It’s a three-way race,” The Standard, 1 March 2012.52 “Leung seeks unity after divisive poll,” South China Morning Post, 26 March 2012.53 As a businessman-turned-politician, Henry Tang was groomed by Beijing for the chief executive pos-

ition for decades. The Chinese government appointed him as secretary for commerce, industry and tech-nology in 2002, financial secretary in 2003, and chief secretary for administration in 2007. Henry Tang’sfather, Tang Hsiang-chien, a textile industrialist from Shanghai, developed ties with former Chinesepresident Jiang Zemin and Henry Tang’s election bid was seen as supported by the Shanghai faction.

54 Leung, Sophie. 2011. “China’s Hong Kong succession takes shape as Tang steps down,” 28 September,http://www.bloomberg.com/news/2011-09-28/hong-kong-chief-secretary-henry-tang-said-to-resign-announcement-planned.html.



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Table 6: High-Profile Circumvention Tactics Used by the Business Sector after 1997

Policy initiative Year Dissatisfaction of business sector Circumvention tactic Outcome85,000 housing targets 2000 Property prices dropped by over 50%

after the implementation of a policy toconstruct 85,000 public housingapartments annually by the TungChee-hwa administration in 1997.Property tycoons wanted the HKSARgovernment to change its public housingprogramme which they consideredseriously affected their interests.

Property tycoons used their politicalconnections to take their complaints toBeijing leaders.1 It was reported thatsome tycoons had expressed theirconcerns about Hong Kong’s propertymarket to state leaders during a visit toBeijing in June 2000.2

Shortly after the property tycoons’ visitto Beijing, chief executive TungChee-hwa announced that the target ofconstructing 85,000 apartments nolonger existed.

Single developmentapproach for WestKowloon CulturalDevelopment Project

2004 The HKSAR government proposed toadopt a single development approachunder which a single tender would beawarded to develop the entire 40-hectareWest Kowloon site. Many propertydevelopers complained that such anapproach would only benefit the biggestdevelopers.

It was reported that many propertydevelopers complained to the mainlandauthorities that the single developmentapproach was unfair and requested thatthe lot be broken up into small pieces ofland for public tender so that small andmedium developers could participate inthe project.3

In February 2006, the new DonaldTsang administration announced thatthe single development approachwould be ditched and that a new roundof public consultation for the wholeproject would take place.

Extension of the“blackout period” forlisted company directors

2009 The business sector strongly opposedthe Hong Kong Stock Exchange’sproposal to extend the blackout periodfor listed company directors from onemonth to seven months.

It was reported that some businessleaders had gone straight to themainland authorities to complain.Ronnie Chan, chairman of Hang LungProperties Ltd., publicly confirmed theexistence of such circumventionactivities.4

In February 2009, the Hong KongStock Exchange modified its proposaland announced that the blackoutperiod would only be extended fromone month to three months.

Notes:1Goodstadt 2009, 136; 2Hong Kong Economic Times 2000; 3Ming Pao 2004; 4Ming Pao 2009.

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step of not running with the tycoons’ preferred candidate,55 some commentatorsargued that the long-time partnership between Beijing and Hong Kong’s capital-ists had come to an end.56

Did the victory of the more populist Leung Chun-ying over business-orientedHenry Tang signal the end of the partnership between Beijing and Hong Kong’scapitalists? It is a question of realpolitik rather than a question that can be satis-factorily answered by academic research at the time of writing. However, a closerexamination of the political dynamics before and after the election would indicatethat the partnership between Beijing and Hong Kong’s capitalists is unlikely tochange overnight and may continue to shape HKSAR governance in the yearsto come.Beijing’s final decision to handpick Leung Chun-ying instead of Henry Tang

was a “Morton’s Fork scenario,” involving a choice between the lesser of thetwo evils, rather than a deliberately-designed plan to change its partnershipwith the Hong Kong capitalists. As the favourite candidate of the major businesstycoons and the senior civil servants, it appears that it was Beijing’s originalintention to back Henry Tang as the next chief executive.57 Although Beijing

Table 7: Background Analysis of Leung Chun-ying and Henry Tang Ying-yen’sSupporters

Occupational background Leung Chun-ying Henry TangYing-yen

No. % No. %Politician 33 10.8 25 6.4Business 92 30.2 278 71.3Professional 64 21 35 9Social services 32 10.5 24 6.2Labour 21 6.9 1 0.3Culture & media 6 2 17 4.4Agriculture 39 12.8 2 0.5Others 18 5.9 8 2.1Total 305 100 390 100

Source:Author’s own research based on the notice of nominations for the 2012 chief executive election and the membership list of 2011

Chief Executive Election Committee, available on the official website of Electoral Affairs Commission, www.eac.gov.hk.Notes:

See notes for Table 1 for definition of categories.

55 It was clear that the major business tycoons favoured Henry Tang and disliked Leung Chun-yingbecause Leung had advocated increasing land supply and bringing down property prices. When therewere signs that Beijing was switching its support to Leung Chun-ying, business supporters of HenryTang, including Jeffrey Lam Kin-fung of the Hong Kong General Chamber of Commerce and PhilipWong Yu-hong of the Chinese General Chamber of Commerce, warned that investors would withdrawtheir capital from Hong Kong if Leung was elected. On 16 March 2012, Hong Kong’s richest tycoon, LiKa-shing, even publicly voiced his support for Henry Tang. These remarks indicated the major businesstycoons’ strong disapproval of Beijing’s decision to handpick Leung Chun-ying instead of Henry Tangas the next HKSAR chief executive.

56 See Wong 2012; Chan 2012.57 “Beijing ‘prefers Tang as new boss’,” South China Morning Post, 20 September 2012.



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gave Leung Chun-ying the green light to enter the race in September 2011 to lenda competitive edge to the electoral process,58 Henry Tang was still seen asBeijing’s first choice. However, Beijing was forced to revisit this plan afterTang became embroiled in an unauthorized building works scandal whichdealt a severe blow to his popular support ratings and creditability.59 Underthese circumstances, it was only politic for Beijing to shift its support awayfrom the scandal-plagued Henry Tang for fear of invoking widespread publicanger in Hong Kong.60 Given that Tang had already become an unelectable can-didate and that scuttling the poll would create further uncertainties,61 the onlyoption for the stability-obsessed leaders in Beijing was to throw their supportbehind Leung Chun-ying, who commanded a higher level of popular supportin various opinion polls.62 At the same time, Beijing stepped up its efforts topacify Henry Tang’s supporters in the business sector.63 Seen from this perspec-tive, it seems that Beijing, in making its final decision to back Leung instead ofTang, was opting for damage control rather than deliberately seeking to changeits partnership with the local capitalists and its longstanding policy to governHong Kong through the state–business alliance.64

58 “Tang Leung Tong ru zha Zhongyang kai lu deng,” (Central government gave green light to Tang andLeung’s candidacies), Ming Pao, 24 September 2011, A10.

59 On 13 February 2012, Ming Pao reported that there was an unapproved basement extension at HenryTang’s home at No. 7 York Road, Kowloon Tong. Tang initially said that the unauthorized work wasto his home at No. 5A York Road, and was for a canopy above the garage which required digging worksto be carried out to deepen the garage for storage. However, on 15 February 2012, Sharp Daily releaseda set of floor plans indicating that the unauthorized structure was a 2,400-square-foot illegal basementcomprising store room, fitness room, cinema and wine-tasting room. On 16 February 2012, HenryTang’s wife took responsibility for the unauthorized works and Tang apologized for mishandling theissue. The scandal seriously damaged the credibility of Henry Tang and opinion polls showed thatthe majority of respondents wanted Henry Tang to quit the chief executive race. See “Tang Ying-yenshe yinman jianjian” (Henry Tang suspected of covering up unauthorized works), Ming Pao, 13February 2012, A01; “Tang Ying-yen dixia xingong” (Henry Tang’s new underground palace), SharpDaily, 15 February 2012, A01.

60 “China frets as choice for Hong Kong leader strays off script,” Reuters, 22 February 2012.61 When Henry Tang became embroiled in the unauthorized building works scandal, some business elites

argued that members of the election committee should cast a blank vote collectively so that neitherLeung Chun-ying nor Henry Tang would have a clear majority to win. To do so would have forceda new round of campaigns in early May and would have provided enough room for the business sectorto identify another, more credible, candidate to replace Henry Tang. However, the idea of scuttling thepoll alarmed the leaders in Beijing who believed that it would only make it more difficult to control theelectoral process and would be harmful for Hong Kong’s stability. For details, see “Te shou xuanjuchuxian liuxuan weiji” (The chief executive election may be aborted), Yazhou zhoukan, 11 March2012, 28–29.

62 Throughout the election, Henry Tang was trailing Leung Chun-ying in various opinion polls andLeung’s support ratings steadily stood above the 40 per cent line. For details, see the website of thePublic Opinion Programme, University of Hong Kong at http://hkupop.hku.hk.

63 For example, in his meeting with the Hong Kong’s NPC and CPPCC delegations on 9 March 2012,Wang Guangya emphasized that, regardless of who took up the office of chief executive, Hong Kongwas still a capitalist economy and the interests of the business sector had to be protected while answeringpublic demands. These remarks have been interpreted as a deliberate attempt by Beijing to pacify thosewho supported Tang. For details, see “Wang Guangya tan te shou xuanju” (Wang Guangya speaks onchief executive election), Wen Wei Po, 10 March 2012, 102.

64 Interview with a senior pro-Beijing politician, April 2012.



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Second, post-election developments indicate that Beijing has made every effortto mend its partnership with Hong Kong’s capitalists, and the business sectorremains the dominant player in its united front work. Following on from the elec-tion, Beijing’s leaders have made “grand reconciliation” (da hejie 大和解) thetheme of Hong Kong policy and have repeatedly called for unity within thepro-establishment camp.65 In line with the spirit of Beijing’s policy, LeungChun-ying embarked on a series of courtesy meetings with leading business fig-ures.66 More importantly, the local capitalists, as in the past few decades, remainthe principal target of Beijing’s political co-option. As indicated from the mem-bership list of the 2012 Preparatory Committee for National Day Celebrationsand the list of HKSAR personalities who were invited to meet Chinese president,Hu Jintao, during his visit to Hong Kong on 30 June 2012 (Tables 8 and 9), bigbusiness tycoons and leaders of major business associations are still the dominantplayers in Beijing’s united front.In view of the above, there is no corroborative evidence that the 2012

chief executive election represented an important change in the longstanding

Table 8: Background Analysis of Members of the 2012 Preparatory Committeefor National Day Celebrations and HKSAR Personalities Meeting ChinesePresident Hu Jintao on 30 June 2012


2012 Preparatory Committeefor National Day Celebrations

HKSAR personalities invitedto meet Chinese President Hu

Jintao

No. % No. %Government 19 11.9 11 5.6Politician 3 1.9 9 4.6Business 83 52.2 91 46.7Professional 8 5 24 12.3Social services 25 15.7 36 18.5Labour 5 3.1 3 1.5Culture & media 13 8.2 19 9.7Others 3 1.9 2 1Total 159* 100 195 100

Source:Author’s own research based on the membership list of the Presidium of Preparatory Committee for National Day Celebrations,

available in Ta Kung Po and Wen Wei Po, and the list of HKSAR personalities who were invited to meet Hu Jintao on 30 June2012, obtained from the Chief Executive’s Office in July 2012.Notes:

See notes for Table 1.

65 For example, the director of the Hong Kong and Macau Affairs Office, Wang Guangya, in his meetingwith the chief executive-elect, Leung Chun-ying, on 9 April 2012, said that after the election differentfactions should put aside their differences and pursue reconciliation and unity.

66 After the election, Leung Chun-ying held high-profile meetings with leading business figures and majorbusiness associations (such as the Hong Kong General Chamber of Commerce, the Chinese GeneralChamber of Commerce, the Chinese Manufacturers’ Association of Hong Kong and the Federationof Hong Kong Industries) on 2 April 2012. On 30 May 2012, Leung also paid a courtesy visit to LiKa-shing and had lunch with him in his office in the Cheung Kong Centre.




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Table 9: Business Tycoons and Leaders of Major Business Associations inBeijing’s United Front

Name Affiliation 2012 PreparatoryCommittee forNational DayCelebrations

HKSAR PersonalitiesMeeting Chinese

President Hu Jintaoon 30 June 2012

Li Ka-shing Chairman of CheungKong HoldingsLimited

X* X

KwokPing-sheung

Non-executive directorof Sun Hung KaiProperties Limited

X X

Lee Shau-kee Chairman ofHenderson LandDevelopmentCompany Limited

X X

Cheng Yu-tung Founder of the NewWorld DevelopmentCompany Limited

X X

WooKwong-ching

Chairman of the WharfHoldings Limited

X X

Chan Chi-chung Chairman of HangLung Group Limited

X X

Li Kwok-po Chairman of the Bankof East Asia

X X

Ho Tsu-kwok Chairman of HongKong TobaccoCompany Limited

X X

Ho Hung-sun Chairman of the ShunTak Group

X X*

Lui Che-woo Chairman of K. WahGroup

X X

ChowChung-kwong

Chairman of HongKong GeneralChamber ofCommerce

X X

ChoiKoon-shum

Chairman of ChineseGeneral Chamber ofCommerce

X X

Irons Sze President of ChineseManufacturers’Association of HongKong

X X

Zhong Zhi-ping Chairman ofFederation of HongKong Industries

X X

Notes:*Li Tzar-kuoi, the eldest son of Li Ka-shing, represented the Li family on the 2012 Preparatory Committee for National Day

Celebrations. Similarly, Ho Chiu-king, the daughter of Ho Hung- sun, represented the Ho family at the meeting with Hu Jintao on30 June 2012.




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partnership between the Chinese government and the Hong Kong’s capitalistclass. At the time of writing, maintaining a partnership with the business sectoris still at the very core of Beijing’s policy towards Hong Kong. Given that thePRC government and Hong Kong’s capitalists still share many common inter-ests, including maintaining the pre-existing HKSAR political-economic orderand resisting the challenges of the democrats, there is no clear sign that Beijingwill fundamentally change its policy in the foreseeable future. But, this doesnot mean that the partnership is completely static. In the years to come, possibletransformations in the political and economic landscapes, such as the implemen-tation of the timetable for universal suffrage in 2017, the further consolidation ofpro-Beijing political parties and the growing influence of mainland capital, maybring about changes in the dynamics of the partnership. Nevertheless, how such apartnership will evolve in future and whether Hong Kong’s capitalists will be ableto maintain their positions of influence and power leverages remains a futureresearch topic for political scientists.

ConclusionHong Kong has always been a dependent polity subject to the ultimate control ofa more powerful sovereign state – London before 1997 and Beijing after 1997.67

Given its political status as a local polity, the relationship between the businesssector and the sovereign state has strong implications for the autonomy of theHong Kong state: a more distant relationship between the business sector andthe sovereign state will help the Hong Kong state to uphold its governing author-ity, while a close partnership between the business sector and the sovereign statewill undermine the authority of the Hong Kong state as the final arbitrator in theterritory.Unfortunately, the post-colonial state has been trapped in the latter situation.

The business sector has become the major coalition partner of the sovereign statesince the handover and Hong Kong’s capitalists have gained privileged access toBeijing by virtue of their over-representation in the NPC and CPPCC delega-tions, their close relationship with the Liaison Office and intricate business net-works with mainland authorities. Although these rules of engagement weredeliberately designed by Beijing to perpetuate the state–business alliance after1997, the ultimate irony is that they have allowed the business sector to establishdirect access to the sovereign state and have equipped them with unprecedentedpower leverages vis-à-vis the post-colonial state, changing the play of politics inHong Kong. Whether and how this partnership evolves after the 2012 chiefexecutive election remains to be seen.

67 Kuan 1991.




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